AEC Blueprint Implementation Performance and Challenges: Non-Tariff Measures and Non-Tariff Barriers

ASEAN has successfully reduced tariffs but not non-tariff measures (NTMs). Efforts to reduce NTMs always hit the debate surrounding justification of application of the measures. Efficiency of implementation of the measures adds to another issue in the agenda to reduce NTMs regardless the debate, and this is the topic addressed by this paper. It examines whether the extent of NTMs affects the operation of firms in doing business, utilizing a small sample of survey conducted at firm level in all ASEAN member states (AMSs). The results showed that significant costs are borne by implementation of NTMs in practice. The higher the cost to implement the measures, the higher the production cost, and this is added to the price of output. The results indicated that procedures and transparency in the process to acquire licenses, permits, and certificates of exporting/importing are the critical factors. This calls for the need of regulatory reform as the way to tackle the issue. The results also suggest the need to improve the availability and the quality of testing facilities which are found to be lacking in many AMSs. These policy recommendations are critical to increase the participation of small and medium enterprises in regional trade, utilizing many preferential measures offered by the ASEAN Economic Community.